International Markets: New York - Small is beautiful in the US
A growing economy with little pickup in inflation means a great environment for business. Smaller US companies should do relatively better than their larger brethren as the smaller companies do little export business and thus aren't hurt by the strong dollar.
"We continue to be in an ideal environment for small company stocks," said J Gary Craven, of small-stock investing at Evergreen Keystone Investments. "We have plenty of opportunities for companies to provide products and services which should be very profitable - and that leads to a strong earnings growth outlook."
Industry analysts forecast that third-quarter earnings for the companies in the S&P 500 will rise 12.2 per cent from last year.
Last week, the S&P 500 gained 0.5 per cent to a record 960.46. The Dow Jones Index rose 1.5 per cent, to 8038.58, still below its 6 August record of 8259.31.
WorldCom Inc's bid for MCI Communications prompted a round of takeover speculation in telecommunications stocks. Teleport Communications Group jumped 8 per cent, even after losing 2 points on Friday.
This week's earnings calendar includes electronics company Motorola and Aluminum Co of America, one of the 30 stocks in the Dow Jones Industrial Average, both on Monday; drugmaker Abbott Laboratories on Thursday and car manufacturer Chrysler Corp on Friday.
"We're enthusiastic about the financial stocks, particularly with interest rates coming down and the good employment report," said Thomas A Kolefas, manager at Loomis, Sayles & Co. Kolefas owns shares in Chase Manhattan, BankAmerica, Fleet Financial Group and Bank of New York.
Some investors, taking a longer view, worry that if the economy is steady, the double-digit earnings growth won't last. "If the economy does lighten up I don't see how you can expect earnings to accelerate," said Mike Hamilton, at Invista Capital Management in Des Moines, Iowa.
Mr Hamilton likes McLeod USA Inc, a local telephone company, and 3Com Corp, which makes products that link computers in networks.
Many investors caution that with the Standard & Poor's 500 Index up 30 per cent this year, stocks already reflect the glowing outlook, so prices may not rise much further from here. Still, with inflation benign and interest rates falling, neither are stocks likely to tumble any time soon.
Copyright: IOS & Bloomberg
- 1 Norwich paedophile ring: Woman at centre of gang who made children 'sexual play things' guilty of 23 offences
- 2 Topshop pulls 'ridiculously skinny' mannequins after being shamed by customer on Facebook
- 3 Ralkina Jones: 37-year-old black woman found dead in police custody
- 4 Black and ethnic minority people twice as likely to be hit by Tory cuts than white people, report finds
- 5 Walter Palmer: American dentist revealed as killer of Cecil the lion in Zimbabwe
Norwich paedophile ring: Woman at centre of gang who made children 'sexual play things' guilty of 23 offences
Mystery over deaths of 3,000 Napoleonic soldiers in mass grave has been solved
Ralkina Jones: 37-year-old black woman found dead in police custody
Black and ethnic minority people twice as likely to be hit by Tory cuts than white people, report finds
Walter Palmer: American dentist revealed as killer of Cecil the lion in Zimbabwe
Labour leadership contender Jeremy Corbyn says 'we can learn a great deal from Karl Marx'
The last thing Labour needs is a leader like Jeremy Corbyn who people want to vote for
I am the Jeremy Corbyn supporter that many will tell you doesn't exist
Public anger after French sunbather beaten up by gang for wearing a bikini in Reims park
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
Labour leadership contest: I would never quit the party, says Liz Kendall
iJobs Money & Business
£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...
£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...
£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...
£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...